The company's revenue guidance increased $1.0 billion to between $98.0 and $100.0 billion, driven by defense volume and services growth, inclusive of the KLX acquisition. Operating cash flow guidance is reaffirmed at $15.0 to $15.5 billion. Full year GAAP earnings per share guidance is increased to between $16.90 and $17.10 from between $16.40 and $16.60 and core earnings per share (non-GAAP)* guidance is increased to between $14.90 and $15.10 from between $14.30 and $14.50 driven by a lower-than-expected tax rate and improved performance at Commercial Airplanes.

"Our teams continued to perform at a high level during the quarter, driving solid operating performance and robust cash generation, and continuing to deliver on our One Boeing advantage by bringing the best of Boeing to our customers," said Boeing Chairman, President and Chief Executive Officer Dennis Muilenburg.

"During the quarter we captured important new defense business, winning and investing in the MQ-25 and T-X programs and securing the MH-139 contract, clearly demonstrating the value Boeing brings to customers while positioning us well for future growth opportunities. Within the Commercial Airplanes business, the 777X static test airplane was completed and moved into test setup and the team's focus on execution across our production programs continued to drive outstanding performance and strong operating margins. Our Global Services business continues to deliver on total lifecycle value to our customers, with key wins in the quarter including P-8 Poseidon training contracts for the U.S. Navy and Royal Australian Air Force and an order from GECAS for 20 737-800 Boeing Converted Freighters. Additionally, we began integrating new data analytics tools, powered by Boeing AnalytX, into all Boeing Defence Australia support contracts, enhancing its position as a leading fleet services provider in the region."

"This strong underlying performance, along with growth across our businesses we've seen throughout the year, give us confidence to raise our 2018 revenue and earnings guidance and reaffirm our operating cash flow guidance."

Operating cash flow in the quarter increased to $4.6 billion, primarily driven by timing of receipts and expenditures as well as planned higher commercial airplane production rates and strong operating performance (Table 2). During the quarter, the company repurchased 7.0 million shares for $2.5 billion, leaving $9.6 billion remaining under the current repurchase authorization which is expected to be completed over approximately the next 12 to 18 months. The company also paid $1.0 billion in dividends in the quarter, reflecting a 20 percent increase in dividends per share compared to the same period of the prior year.

Table 3. Cash, Marketable Securities and Debt Balances

Quarter-End

(Billions)

Q3 18

Q2 18

Cash

$8.0

$8.1

Marketable Securities1

$2.0

$1.7

Total

$10.0

$9.8

Debt Balances:

The Boeing Company, net of intercompany loans to BCC

$9.4

$9.6

Boeing Capital, including intercompany loans

$2.5

$2.5

Total Consolidated Debt

$11.9

$12.1

1Marketable securities consists primarily of time deposits due within one year classified as "short-term investments."

Cash and investments in marketable securities totaled $10.0 billion, compared to $9.8 billion at the beginning of the quarter (Table 3). Debt was relatively stable at $11.9 billion.

Total company backlog at quarter-end was $491 billion, up from $488 billion at the beginning of the quarter, and included net orders for the quarter of $28 billion.

Segment Results

Commercial Airplanes

Table 4. Commercial Airplanes

Third Quarter

Nine Months

(Dollars in Millions)

2018

2017

Change

2018

2017

Change

Commercial Airplanes Deliveries

190

202

(6)%

568

554

3%

Revenues

$15,276

$15,393

(1)%

$43,409

$42,626

2%

Earnings from Operations

$2,023

$1,513

34%

$5,175

$3,665

41%

Operating Margin

13.2%

9.8%

3.4 Pts

11.9%

8.6%

3.3 Pts

Commercial Airplanes third-quarter revenue of $15.3 billion was relatively unchanged, reflecting lower deliveries largely offset by mix (Table 4). Third-quarter operating margin increased to 13.2 percent, reflecting higher 787 margin and strong operating performance on production programs, partially offset by $112 million of cost growth on the KC-46 Tanker program due to higher than expected effort to meet customer requirements to support delivery of the initial aircraft, as well as due to incremental delays in certification and testing.

During the quarter, Commercial Airplanes delivered 190 airplanes, including 57 737 MAX airplanes. The 777X program remains on track for delivery in 2020 as the static test airplane was completed and moved into test setup and the first two flight test airplanes were in production.

Commercial Airplanes booked 171 net orders during the quarter, valued at $13 billion. The 787 program has captured more than 100 orders in 2018 and nearly 1,400 orders since its launch. Backlog remains robust with more than 5,800 airplanes valued at $413 billion. Commercial Airplanes revenue guidance is reaffirmed at between $59.5 and $60.5 billion and margin guidance is increased to between 12% and 12.5% from greater than 11.5% on strong performance.

During the quarter, Defense, Space & Security won key franchise program awards, including the T-X Trainer and MH-139 helicopter for the U.S. Air Force, the MQ-25 unmanned aircraft for the U.S. Navy, and the fourth KC-46 Tanker production lot. Significant milestones during the quarter included first flights of the Apache and Chinook for the Indian Air Force and receipt of Supplemental Type Certification for the KC-46 Tanker program, signifying completion of FAA certification. We also completed the acquisition of Millennium Space Systems, which will provide customers with advanced small-satellite technologies and flexible solutions.

Backlog at Defense, Space & Security was $58 billion, of which 31 percent represents orders from customers outside the U.S. Defense, Space & Security revenue guidance increased to between $22.5 and $23.0 billion from between $22.0 and $23.0 billion driven by higher volume and margin guidance is adjusted to greater than 6.5% from between 10% and 10.5% primarily to account for the investments in the business.

During the quarter, Global Services was awarded P-8 training contracts for the U.S. Navy and Royal Australian Air Force, captured an order from GECAS for 20 737-800 converted freighters, and completed the first P-8A heavy maintenance check for the U.S. Navy. Global Services also secured contracts for F/A-18 spares for the Defense Logistics Agency and KC-46 Tanker services for Lots 3 and 4. In early October, Global Services completed the acquisition of KLX, which will enhance our services business and allow us to deliver greater value to customers.

Global Services revenue guidance increased to between $16.0 and $16.5 billion from between $15.5 and $16.0 billion driven by higher volume and margin guidance is reaffirmed at approximately 15.5%.

Additional Financial Information

Table 7. Additional Financial Information

Third Quarter

Nine Months

(Dollars in Millions)

2018

2017

2018

2017

Revenues

Boeing Capital

$77

$70

$214

$234

Unallocated items, eliminations and other

($27)

$131

($45)

$287

Earnings from Operations

Boeing Capital

$27

$23

$71

$87

FAS/CAS service cost adjustment

$337

$346

$1,019

$1,049

Other unallocated items and eliminations

($458)

($233)

($1,168)

($771)

Other income, net

$12

$40

$63

$91

Interest and debt expense

($106)

($87)

($317)

($267)

Effective tax rate

(10.8)%

29.9%

6.9%

28.5%

At quarter-end, Boeing Capital's net portfolio balance was $3.1 billion. Revenue in other unallocated items and eliminations decreased primarily due to the 2017 sale of aircraft previously leased to customers. The change in earnings from other unallocated items and eliminations is primarily due to timing of expense allocations. The effective tax rate for the third quarter decreased from the same period in the prior year primarily due to a $412 million benefit related to a 2013-2014 tax settlement and the reduction of the federal tax rate to 21%.

1 Approximately $1.4 billion of pension expense is expected to be allocated to the business segments

Non-GAAP Measures Disclosures

We supplement the reporting of our financial information determined under Generally Accepted Accounting Principles in the United States of America (GAAP) with certain non-GAAP financial information. The non-GAAP financial information presented excludes certain significant items that may not be indicative of, or are unrelated to, results from our ongoing business operations. We believe that these non-GAAP measures provide investors with additional insight into the company's ongoing business performance. These non-GAAP measures should not be considered in isolation or as a substitute for the related GAAP measures, and other companies may define such measures differently. We encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. The following definitions are provided:

Core operating earnings is defined as GAAP earnings from operations excluding the FAS/CAS service cost adjustment. The FAS/CAS service cost adjustment represents the difference between the FAS pension and postretirement service costs calculated under GAAP and costs allocated to the business segments. Core operating margin is defined as core operating earnings expressed as a percentage of revenue. Core earnings per share is defined as GAAP diluted earnings per share excluding the net earnings per share impact of the FAS/CAS service cost adjustment and Non-operating pension and postretirement expenses. Non-operating pension and postretirement expenses represent the components of net periodic benefit costs other than service cost. Pension costs, comprising service and prior service costs computed in accordance with GAAP are allocated to Commercial Airplanes and BGS businesses supporting commercial customers. Pension costs allocated to BDS and BGS businesses supporting government customers are computed in accordance with U.S. Government Cost Accounting Standards (CAS), which employ different actuarial assumptions and accounting conventions than GAAP. CAS costs are allocable to government contracts. Other postretirement benefit costs are allocated to all business segments based on CAS, which is generally based on benefits paid. Management uses core operating earnings, core operating margin and core earnings/per share for purposes of evaluating and forecasting underlying business performance. Management believes these core earnings measures provide investors additional insights into operational performance as they exclude non-service pension and post-retirement costs, which primarily represent costs driven by market factors and costs not allocable to government contracts. A reconciliation between the GAAP and non-GAAP measures is provided on pages 14-15.

Free Cash Flow

Free cash flow is defined as GAAP operating cash flow without capital expenditures for property, plant and equipment additions. Management believes free cash flow provides investors with an important perspective on the cash available for shareholders, debt repayment, and acquisitions after making the capital investments required to support ongoing business operations and long term value creation. Free cash flow does not represent the residual cash flow available for discretionary expenditures as it excludes certain mandatory expenditures such as repayment of maturing debt. Management uses free cash flow as a measure to assess both business performance and overall liquidity. Table 2 provides a reconciliation between GAAP operating cash flow and free cash flow.

Caution Concerning Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "may," "should," "expects," "intends," "projects," "plans," "believes," "estimates," "targets," "anticipates," and similar expressions generally identify these forward-looking statements. Examples of forward-looking statements include statements relating to our future financial condition and operating results, as well as any other statement that does not directly relate to any historical or current fact. Forward-looking statements are based on expectations and assumptions that we believe to be reasonable when made, but that may not prove to be accurate. These statements are not guarantees and are subject to risks, uncertainties, and changes in circumstances that are difficult to predict. Many factors could cause actual results to differ materially and adversely from these forward-looking statements. Among these factors are risks related to: (1) general conditions in the economy and our industry, including those due to regulatory changes; (2) our reliance on our commercial airline customers; (3) the overall health of our aircraft production system, planned commercial aircraft production rate changes, our commercial development and derivative aircraft programs, and our aircraft being subject to stringent performance and reliability standards; (4) changing budget and appropriation levels and acquisition priorities of the U.S. government; (5) our dependence on U.S. government contracts; (6) our reliance on fixed-price contracts; (7) our reliance on cost-type contracts; (8) uncertainties concerning contracts that include in-orbit incentive payments; (9) our dependence on our subcontractors and suppliers, as well as the availability of raw materials; (10) changes in accounting estimates; (11) changes in the competitive landscape in our markets; (12) our non-U.S. operations, including sales to non-U.S. customers; (13) threats to the security of our or our customers' information; (14) potential adverse developments in new or pending litigation and/or government investigations; (15) customer and aircraft concentration in our customer financing portfolio; (16) changes in our ability to obtain debt on commercially reasonable terms and at competitive rates; (17) realizing the anticipated benefits of mergers, acquisitions, joint ventures/strategic alliances or divestitures; (18) the adequacy of our insurance coverage to cover significant risk exposures; (19) potential business disruptions, including those related to physical security threats, information technology or cyber-attacks, epidemics, sanctions or natural disasters; (20) work stoppages or other labor disruptions; (21) substantial pension and other postretirement benefit obligations; (22) potential environmental liabilities.

Additional information concerning these and other factors can be found in our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Any forward-looking statement speaks only as of the date on which it is made, and we assume no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law.

Effect of exchange rate changes on cash and cash equivalents, including restricted

(37)

73

Net decrease in cash & cash equivalents, including restricted

(725)

(194)

Cash & cash equivalents, including restricted, at beginning of year

8,887

8,869

Cash & cash equivalents, including restricted, at end of period

8,162

8,675

Less restricted cash & cash equivalents, included in Investments

128

106

Cash and cash equivalents at end of period

$8,034

$8,569

The Boeing Company and Subsidiaries

Summary of Business Segment Data

(Unaudited)

Nine months endedSeptember 30

Three months endedSeptember 30

(Dollars in millions)

2018

2017

2018

2017

Revenues:

Commercial Airplanes

$43,409

$42,626

$15,276

$15,393

Defense, Space & Security

17,084

15,304

5,729

5,050

Global Services

12,124

10,784

4,091

3,579

Boeing Capital

214

234

77

70

Unallocated items, eliminations and other

(45)

287

(27)

131

Total revenues

$72,786

$69,235

$25,146

$24,223

Earnings/(loss) from operations:

Commercial Airplanes

$5,175

$3,665

$2,023

$1,513

Defense, Space & Security

925

1,649

(245)

486

Global Services

1,790

1,687

543

495

Boeing Capital

71

87

27

23

Segment operating profit

7,961

7,088

2,348

2,517

Unallocated items, eliminations and other

(1,168)

(771)

(458)

(233)

FAS/CAS service cost adjustment

1,019

1,049

337

346

Earnings from operations

7,812

7,366

2,227

2,630

Other income, net

63

91

12

40

Interest and debt expense

(317)

(267)

(106)

(87)

Earnings before income taxes

7,558

7,190

2,133

2,583

Income tax (expense)/benefit

(522)

(2,052)

230

(773)

Net earnings

$7,036

$5,138

$2,363

$1,810

Research and development expense, net:

Commercial Airplanes

$1,616

$1,755

$517

$538

Defense, Space & Security

613

599

211

207

Global Services

119

101

48

38

Other

69

(38)

50

(15)

Total research and development expense, net

$2,417

$2,417

$826

$768

Unallocated items, eliminations and other:

Share-based plans

($60)

($67)

($24)

($21)

Deferred compensation

(112)

(174)

(56)

(78)

Amortization of previously capitalized interest

(67)

(68)

(19)

(22)

Eliminations and other unallocated items

(929)

(462)

(359)

(112)

Sub-total (included in core operating earnings)

(1,168)

(771)

(458)

(233)

Pension FAS/CAS service cost adjustment

780

811

260

271

Postretirement FAS/CAS service cost adjustment

239

238

77

75

FAS/CAS service cost adjustment

$1,019

$1,049

$337

$346

Total

($149)

$278

($121)

$113

The Boeing Company and Subsidiaries

Operating and Financial Data

(Unaudited)

Deliveries

Nine months ended September 30

Three months endedSeptember 30

Commercial Airplanes

2018

2017

2018

2017

737

407

381

138

145

747

5

8

(1)

2

4

767

13

7

4

2

777

37

58

12

16

787

106

100

34

35

Total

568

554

190

202

Note: Aircraft accounted for as revenues by BCA and as a note receivable in consolidation identified by parentheses

Defense, Space & Security

AH-64 Apache (New)

—

8

—

3

AH-64 Apache (Remanufactured)

12

43

6

15

CH-47 Chinook (New)

11

6

2

2

CH-47 Chinook (Renewed)

14

28

6

9

F-15 Models

8

11

3

4

F/A-18 Models

10

18

5

6

P-8 Models

10

14

2

5

Commercial and Civil Satellites

1

3

1

—

Military Satellites

—

—

—

—

Total backlog (Dollars in millions)

September 30

December 31

2018

2017

Commercial Airplanes

$413,064

$410,526

Defense, Space & Security

57,875

44,049

Global Services

20,240

19,605

Total backlog

$491,179

$474,180

Contractual backlog

$462,468

$456,524

Unobligated backlog

28,711

17,656

Total backlog

$491,179

$474,180

The Boeing Company and Subsidiaries

Reconciliation of Non-GAAP Measures

(Unaudited)

The tables provided below reconcile the non-GAAP financial measures core operating earnings, core operating margin, and core earnings per share with the most directly comparable GAAP financial measures, earnings from operations, operating margin, and diluted earnings per share. See page 7 of this release for additional information on the use of these non-GAAP financial measures.

(Dollars in millions, except per share data)

2018 Guidance

Third Quarter 2018

Third Quarter 2017

$ millions

Per Share

$ millions

Per Share

$ millions

Per Share

Revenues

25,146

24,223

Earnings from operations (GAAP)

2,227

2,630

Operating margins

8.9%

10.9%

FAS/CAS service cost adjustment:

Pension FAS/CAS service cost adjustment

(260)

(271)

Postretirement FAS/CAS service cost adjustment

(77)

(75)

FAS/CAS service cost adjustment

~($1,395)

(337)

(346)

Core operating earnings (non-GAAP)

$1,890

$2,284

Core operating margins (non-GAAP)

7.5%

9.4%

Diluted earnings per share (GAAP)

$16.90 - 17.10

$4.07

$2.99

Pension FAS/CAS service cost adjustment

~($1,395)

($260)

(0.45)

($271)

(0.45)

Postretirement FAS/CAS service cost adjustment

(77)

(0.13)

(75)

(0.12)

Non-operating pension expense

~($90)

(50)

(0.09)

(26)

(0.05)

Non-operating postretirement expense

29

0.05

31

0.05

Provision for deferred income taxes on adjustments 1

75

0.13

119

0.20

Subtotal of adjustments

($2.00)

($283)

($0.49)

($222)

($0.37)

Core earnings per share (non-GAAP)

$14.90 - 15.10

$3.58

$2.62

Weighted average diluted shares (in millions)

585 - 590

580.8

606.3

1 The income tax impact is calculated using the U.S. corporate statutory tax rate.

The Boeing Company and Subsidiaries

Reconciliation of Non-GAAP Measures

(Unaudited)

The tables provided below reconcile the non-GAAP financial measures core operating earnings, core operating margin, and core earnings per share with the most directly comparable GAAP financial measures, earnings from operations, operating margin, and diluted earnings per share. See page 7 of this release for additional information on the use of these non-GAAP financial measures.

(Dollars in millions, except per share data)

2018 Guidance

Nine Months 2018

Nine Months 2017

$ millions

Per Share

$ millions

Per Share

$ millions

Per Share

Revenues

72,786

69,235

Earnings from operations (GAAP)

7,812

7,366

Operating margins

10.7%

10.6%

FAS/CAS service cost adjustment:

Pension FAS/CAS service cost adjustment

(780)

(811)

Postretirement FAS/CAS service cost adjustment

(239)

(238)

FAS/CAS service cost adjustment

~($1,395)

(1,019)

(1,049)

Core operating earnings (non-GAAP)

$6,793

$6,317

Core operating margins (non-GAAP)

9.3%

9.1%

Diluted earnings per share (GAAP)

$16.90 - 17.10

$11.95

$8.39

Pension FAS/CAS service cost adjustment

~($1,395)

($780)

(1.32)

($811)

(1.32)

Postretirement FAS/CAS service cost adjustment

(239)

(0.41)

(238)

(0.39)

Non-operating pension expense

~($90)

(98)

(0.17)

(88)

(0.15)

Non-operating postretirement expense

77

0.13

91

0.15

Provision for deferred income taxes on adjustments 1

218

0.37

366

0.60

Subtotal of adjustments

($2.00)

($822)

($1.40)

($680)

($1.11)

Core earnings per share (non-GAAP)

$14.90 - 15.10

$10.55

$7.28

Weighted average diluted shares (in millions)

585 - 590

588.9

612.8

1 The income tax impact is calculated using the U.S. corporate statutory tax rate.